The demand by university presidents for a €300,000 salary is not outlandish. We must reward those who are committed to change, relevance and the pursuit of excellence. Otherwise, Ireland will fail to sustain the building of the great universities it needs, argues Ed Walsh

Competition in the knowledge age has become a race for talent: universities have moved to the apex of the competitive system in developed countries. World-class universities give a special competitive edge: they strongly influence foreign direct investment and wealth creation. As a result, governments globally are pressing to ensure that their universities are vibrant and competitive.

Most European governments are agitated by the fact that their universities fare so badly in new international rankings. Prior to the second World War, the world's best universities were in Europe. Now the US wins most of the Nobel prizes in science and European universities make poor showings. Eight of the world's top 10 universities are in the US, and seven of these, including Harvard, Yale, Stanford, MIT and Columbia, are run as private corporations with the associated no-nonsense policies that nurture excellence and ostracise the second-rate.

In contrast, many European states have in effect nationalised the universities, turned academics into public servants, locked them on salary scales and created bureaucratic formulas that tolerate mediocrity and often fail to reward excellence. Talent has drifted away and many of Europe's once-great universities have been humbled.

Poor rankings in the international polls have highlighted this reality and many European governments are now moving to revitalise their lacklustre universities. Germany is attempting to create nine elite universities and Britain has given university leadership considerable discretion in fostering and recruiting vital talent.

Recently, under the National Development Plan, Ireland has moved in a most determined and creative way to boost the low research standing of its universities and compensate for 80 years of neglect. Research funding has been dramatically increased from miserly millions to generous billions in a way that has caught the imagination of the multinationals and the international research community. Science Foundation Ireland has been established with panache and is proving a remarkable success. Flexibility has been demonstrated in offering the kind of remuneration packages essential to compete internationally in attracting some of the world's great researchers to Ireland. The strategy is already paying off: major multinationals have started to make research investments unprecedented in Ireland. Enterprise that invests in research and intellectual talent puts down deep roots that make flitting eastwards before the next minimum wage increase much less likely.

But our universities are still under the maw of the State, governance structures are inappropriate and cumbersome, the executive is constrained and leadership lacks the financial discretion necessary to weave and duck while pursuing and capturing world talent.

The best of the US, UK and Australian universities have the kind of discretion that permits them to "go for broke" in the pursuit of a person who is vital . . . an academic who is a potential Nobel laureate or a president or vice president with the necessary exceptional abilities. Ireland's development agencies are becoming increasingly aware that Irish universities need similar flexibility and unless a number of our universities make good progress towards the top-100 international rankings Ireland's long-term wealth and job-creation prospects are at some risk.

Moving a university into the top-100 category calls for remarkable commitment at all levels: especially from the president and vice-presidential team.

Courage and management skill is called for in terminating jaded programmes and transferring resources to more relevant ones, facing down entrenched university groups committed to the status quo - and then selectively allocating resources and reward to those who are committed to change, relevance and the pursuit of excellence. Unless the Irish universities are encouraged to do this, and can compete internationally in attracting and retaining the necessary leadership talent, Ireland will fail to sustain the building of the great universities it needs.

The quality of the university executive leadership team is a key determining factor in building a great university. Despite the public image created by gown-clad presidents mumbling Latin at conferring ceremonies the leadership and executive challenge at presidential and vice-presidential level are immense. With annual budgets now measured in fractions of a billion, several thousand staff, overseas programmes, international fundraising and a diverse list of campus companies, few are fit to undertake the multidimensional role of university president. Given the nature of the people involved and the complexity of the structures, the challenge in driving forward a university is far more demanding than doing likewise with a business of comparable scale.

Universities intent on achieving excellence compete globally and use international head-hunters to track down talent. When a presidential or vice-presidential vacancy is due to arise, a major global talent hunt is launched. In leading US universities, salary is seldom the constraint: but finding the right person willing to take the job is.

The situation in Ireland is otherwise. University governing authorities are finding that, while they have the discretion to head-hunt, salary constraints dominate the recruitment of senior talent.

The annual salary paid to Irish university presidents ranges from €186,000 to €205,000 and in some cases the president is obliged to live on campus in the president's residence (often considered more of an imposition thaa benefit). It might seem that remuneration is high enough already and the proposal to move into the €300,000 range is unjustified. But the reality is vividly evident, to those attempting to recruit leadership at both presidential and vice-presidential levels, that existing remuneration packages are uncompetitive. For example, recently a potential candidate for a vice-presidential position at an Irish university was approached. He was working in a senior position in Ireland and willing to accept the university challenge, but when it emerged that his existing earnings were over €300,000 discussions came to a grinding halt: the university could not compete and the appointment was not made.

With experiences like this it is not surprising that those who recognise the importance of moving our universities towards the top-100 league realise that, if world-class leadership is to be attracted and retained, Ireland must abandon the old constraints that hamper senior executive recruitment. Ireland has made great strides recently in putting flexible remuneration packages in place to attract academic research talent; it must do likewise for university leadership.

Remuneration for university presidents has escalated rapidly elsewhere, as an increasing number of developed countries competes intensely for scarce talent. Ireland is now at a serious competitive disadvantage. In the UK the earnings of many university vice-chancellors breached the €300,000 mark several years ago, while in the US, 50 university presidents are paid over $500,000 and five over $l million a year.

In this competitive international context the proposed annual salary for Irish university presidents, in the €300,000 range, does not appear outlandish. Smart organisations committed to excellence don't skimp on their senior executive team.

Dr Edward M Walsh is founding president of the University of Limerick